The
Term "Marketing"
Everyone uses this term and nobody knows exactly what it actually means.
"How much do you spend for marketing?" we were supposed to specify
in an inquiry. You might as well ask me how much I'm spending for my health.
"Marketing is the adjustment of the possibilities
of an enterprise to the market needs." A definition that
needs to be explained.
According to Oppenheim (Oppenheims Unternehmerbrevier / 36 lessons about
management / 1972 Econ Verlag Wien), the enterprise operates in 4 markets
carrying out a transformation process in each of these markets (Picture
1).
The Production Process
Raw materials or semi-finished goods are transformed into finished products.
This is the product market.
The Sales Volume or the Sales Process
Potential buyers are transformed to customers. This is the sales market.
The Personnel Process
Beginners are transformed to experts. This is the labor market.
The Financial Process
Investments are transformed to enterprises. The value is available as
stock. This is the capital market.
These four processes need to agree with each other like the organs in
a human being. If one organ is sick, the human being is getting sick;
if one of the processes sickens, the enterprise will get sick.
Marketing is the coordination of the four transformation processes, the
adjustments of the processes to the changes of the markets. Marketing
is the actual management responsibility: The directing of the enterprise
through changing markets.
Now, let's analyse the markets for companies producing pressure sensors
and pressure transmitters:
The Sales Market
During the 30 years I've been working in this field, the sales market
has been subject to many changes. In the beginning, the market was unflexible,
meaning that cutting the prices by half would hardly have created a higher
demand.
By 1964, pressure transducers have almost exclusively been used for research
in the laboratory market. The extremely high transducer prices allowed
at the most the use in the military field, in the aviation industry and
for medical applications. The industrial use was very rare. A pressure
sensor market for consumer goods or automobiles was inconceivable.
But the industrial demand increased. By the mid seventies, new technologies
and price reductions started to boost one another, soon leading to applications
in cars and consumer goods. This development is shown in picture 2.
The Trend in Prices
In the beginning, established suppliers were trying to follow the trend
in prices initiated by the industrial market. Later on, the prices in
the laboratory market in creased again. The sales costs arising from small
quantity orders have increased drastically and sometimes even exceeded
the production costs. Due to the present overcapacity, prices in the industrial
market can be expected to hit bottom. After the adjustment of the market,
prices are due to increase again affected by inflation.
The sales market for pressure sensors is now as ever imprinted by an established
market coverage and by its intransparency. The traditional suppliers are
defending their positions with vehemence and sometimes with questionable
reasonings.
Initially, the piezoresistive technology was characterized by many flops.
Thirty years ago, the thin-film transducers from Statham were really the
first stable transducers on the market. Even today, statements like "piezoresiti
ve is not stable" still find open ears. That explains why the DIN
(German Institut for Standardization) committee, where the old houses
used to sit, refuses to even define stability.
The Product Market
Sooner or later, the market positions will depend on the technologies.
In a transparent market, we estimate that the gross of industrial applications
in the range from 10 mbar to 1 bar will be saturated with the capacitive
ceramic sensor. In the range from 1 bar to 1000 bar, the piezoresistive
technology will dominate the market. Other technologies will have to operate
in niche-markets because, for example, the costs resulting using thin
film technology are too high to keep up with large-scale projects.
Also, a selection will take place among the piezoresistive suppliers which
is de termined by the their production depth. Manufacturers conducting
their own diffusion for IC-chips are unnecessarily burdening themselves
and will never be able to keep up with the state of development. Since
the beginning of our activities, our suppliers for wafers have changed
from 3 to 4, and from 4 to 5 inches; sometimes requiring investments of
many millions. The change to 6 inches is already in process. Bearing furthermore
in mind that today the chip only makes up 2% to 5% of the transmitter
cost is another reason to believe that these companies will not be able
to endure the burden in the long run.
Manufacturers that buy chips and install them in insulated housings are
very limited in their flexibility. Manufacturers buying chips wrapped
in steel, and installing them in transmitter housings are giving away
the most important part of the value being added; this happening in a
technology which should actually be their strength.
The Labor Market
The labor market is characterized by regional differences. In England
and in the USA the industrial hourly rate of pay costs 20% less than in
Germany. A higher level of training and usually a better work attitude
are facing the rate in the Far East, which is lower by factors.
The Capital Market
Return on investment is being calculated the same way everywhere. In the
USA, the readiness for taking risks and the high-tech enthusiasm was much
higher for a long time. After many flops and a lack of return, the enthusiasm
has calmed down again.
This as a preliminary information to the analysis of the companies that
have or want to have any influence on the industrial sensor and transmitter
market.
Analysis of the Companies
For that purpose we close the circle and draw a balance of the marketing
strategies of the different players. In the sales market we analyse the
market coverage and the market shares, in the capital market the financial
possibilities, in the product- and labor market the capacity, the technology
and the know-how. Also if the employees have the capability and know-how
to adjust themselves to the changing needs of the market (see picture
3).
Evaluation of the sensor- and transmitter manufacturers:
IC-Sensor / Sensym / Nova Sensor
These companies all arose as spin offs from the Silicon Valley IC-technology.
They all conduct their own diffusion with a great deal of effort and have
alltogether the tenfold world capacity for silicon pressure sensors. In
spite of many efforts, they have never really gained footage in the industrial
market. Their best available technology for an industrial packaging is
not sufficient for European demands. They were only able to rise and to
survive due to capital transfusions of high-tech despaired industries
with mechanical products. This factor influences the capital market through
the whole company history.
Honeywell
They have their own diffusion line for other applications (Hall Switch).
Them neither have ever been able to produce the mechanical packaging for
industrial applications and they have lost significance in the sensor
market. Honeywell also stands representatively for manufacturers such
as Foxboro, Endress and Hauser which have a basic demand for sensors for
their system market. They have developed own technologies with a lot of
money and are now trying to get back the costs on the high-volume industrial
market. That didn't work for Siemens nor for Philips. A marketing problem
that certainly can not be found in the market coverage.
Haenni / Jumo / WIKA / Trafag
They all have entered the market with a very good market coverage due
to their experience in mechanical manometers and manometric switches.
WIKA and Trafag have let themselves be mislead by the teething troubles
of the piezoresistive technology and have concentrated on thin film, partly
with huge investments. As well as Haenni, these are companies ruled by
financial power and market coverage without adjustment of the internal
structure nor a profound analysis of the future of these technologies.
Druck / Hottinger Baldwin / Kistler
Long-established, venerable companies having grown up in the high-price
phase of the transducers. Due to their cost structure, they sooner or
later gave up the attempt to be major players in the industrial market.
They mainly profit from the industrial market's intransparency and the
market coverage.
Over the last years, these companies have successfully settled into the
instrumentation market. But the high-price policy and the fear of self-competition
have caused them to oversleep the most recent developments. The pressure
on these companies will increase.
Baumer
High-tech company without sufficient market coverage. The sensor market
is characterized by a very large inertia, long established firms are the
ones profiting All newcomers will have to make that experience at first.
STS
This company stands representatively for a completely failed state development
policy; a disturbing factor in this field over the last years.
With our tax money, the government promotes envious people and copiers
that bring nothing more to the market but an increase in overcapacity,
the collapse of the prices, therefore less recources for the development
and finally it is promoting the collapse of the entire industry.
STS furthermore operates with arguments such as "The turned chips
of KELLER break much faster than etched chips." Two analysis, one
of Nova Sensor, the other of Schoppe+Faser have shown that at the point
of break, the rounded silicon transitions of KELLER have a 8 to 9 times
smaller tension than the etched, sharp-edged of IC Sensors which STS uses.
Just as idiotic is the argumentation of thin-film manufacturers or of
Valvo's "metal specialists" (they meanwhile disappeared from
the market) that compared to silicon, steel girders don't burst after
overload. That's why IMO now has to indicate in his brochure of the "highly
accurate" digital transmitter that after some minutes of double load,
the zero point could shift about 0.5%. And how big is this shift after
100 hours of full load with highest operating temperature, Mister Imo
Transamerica? Do you know the definition "Overload is the range in
which transducers don't experience any permanent changes"? And doesn't
silicon have the ideal sensor feature that, whatever has happened to the
sensor, even after a 5-fold over load, the sensor is either being destroyed
or the same as before?
I'm not insinuating any spite, rather a blind optimism. When we had stability
problems with our first transducers, Kistler's sales manager (Dipl. Ing.
ETH) had the opinion that "we (he meant the piezoelectrical transducers)
do not have any zero offset proplems, we don't have a zero point."
Already in La Fontaine's legend says the worm to the ant (which complained
about her bad legs): "I never have any problems with my legs, I dont'
have any legs."
Final Observation
It's the management's responsibility to study the changes of the markets
and to adjust the company to these changes. In this regard, the phrase
of a successful manager should be understood, being asked for the secret
of his success: "Every morning, coming to my desk, I first ask myself:
What's the most important that I'll have to do today?"
The human being who has a sick organ is affected day by day. It's only
focusing on the healing of its organ. That explains why today's companies
hardly ever think about the biggest danger facing all companies: The collapse
of the environment and the splitting tendency of the society into possessing
and expelled people, leading sooner or later to the collapse of the society.
People with sick organs only think about their illness, they don't care
if the world collapses after them.
How much do you spend for your health? Let's have another look at this
question.
The health care system is being talked about a lot in every country. According
to Oppenheim, the health care system is, in contrary to a company, an
institution that is spreading up to social unsociability at the general
public's cost.
Japan is said to have a system where the citizen is paying the doctor
a monthly fee as long as the citizen is healthy. If he's getting sick,
the doctor is obliged to care for him at no charge. If the citizen is
unable to work, he doesn't have to pay the doctor. This would be a system
where all statutory features of a free market economy are effective. The
malingerer pays a much higher premium with a good doctor, or he consults
a bad doctor who in turn earns less money. Also, the doctor doesn't make
unnecessary therapies just to keep himself busy.
Thanks to the technology, the efficiency in the sensor market has increased
by factors. Kistler proudly wrote at their 20th anniversary that they
have been producing more than 20'000 pieces of their most popular transducer.
This year, KELLER will produce about 60'000 series 21 transmitters.
Within the same time, the number of practising doctors per citizens has
in creased by factors in the Swiss cities.
How much do you spend for your health? This figure on the letter of application
would relieve the labor market for the entrepreneurs significantly.
KELLER AG für
Druckmesstechnik
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